Sharechat Logo

NZ dollar dips after Fed minutes, US data lift greenback; dairy futures subside

Thursday 4th January 2018

Text too small?

The New Zealand dollar dipped after minutes of the last Federal Reserve meeting showed policymakers see future rate rises being tied to inflation and fiscal stimulus including tax cuts.

The kiwi traded at 70.87 US cents as at 8:30am in Wellington from 71.10 cents before the Fed minutes were released leaving it little changed from late yesterday. The trade-weighted index was at 73.77 from 73.72 yesterday.

The minutes said most participants "reiterated their support for continuing a gradual approach to raising the target range" while tax cuts were expected "to provide some boost to consumer spending" and "provide a modest boost to capital spending". The minutes were released after figures showed US construction spending rose 0.8 percent to a record US$1.26 trillion in November and the Institute for Supply Management manufacturing index rose to a higher-than-expected 59.7 last month.

"The US dollar has been unloved of late and rebounded post the minutes," said Mark Johnson, a senior dealer at OMF. The kiwi may encounter resistance if it rises back to 71.06 US cents and may find support if it falls to 70.29 cents, based on chart analysis, he said.

In the subdued trading post the Christmas-New Year break, and little local news in New Zealand, the next big event to watch will be US payrolls data on Friday, which is expected to show the world's biggest economy added 188,000 jobs in December, down from 228,000 the previous month.

Johnson said while yesterday's dairy auction was "reasonably strong", with whole milk powder (WMP) rising 4.2 percent, milk powder futures failed to keep rallying after the auction.

Still, analysts at AgriHQ lifted the AgriHQ milk price forecast for the current season by 1 cent to $6.10 per kilogram of milk solids following the latest Global Dairy Trade auction, saying while that was still "well shy" of Fonterra Cooperative Group's 2017/18 forecast of $6.40/kgMS, "the likelihood of reaching this forecast has now improved given that WMP prices are tracking higher again."

The kiwi dollar rose to 52.47 British pence from 52.09 pence yesterday and traded at 90.52 Australian cents from 90.63 cents. It gained to 59.02 euro cents from 58.78 cents. It rose to 79.77 yen from 79.57 yen and traded at 4.6079 yuan from 4.6071 yuan.


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar trades in tight range as ECB confirms end to quantitative easing
MARKET CLOSE: NZ shares rise as optimism over US-China trade deal lingers; Fletcher gains
NZD under pressure against Aussie as investors cheered by easing of trade jitters
PFI properties’ valuation rises 5.5% to $1.32 billion
Broader definition of workplace harm in new govt health & safety strategy
MBIE officials grilled on terms of Westland Milk loan
Trade Me suitor Hellman & Friedman drops out
Hydrogen not a short-term option for Huntly - Genesis
Kiwibank says customers have a dwindling need of physical branches
Buying off the plans driving down KiwiBuild cost to govt: HYEFU

IRG See IRG research reports